THE BLIND CONSPIRACY: The Gold Market Is Heading Towards A Big Fundamental Change

The gold market is heading towards a big fundamental change that few are prepared. While many analysts in the alternative media community suggest that the gold price is manipulated due to Fed and Central bank intervention, there is another more obscure rationale that is the likely culprit. I call it, “The Blind Conspiracy.”

But, before I get into the details of this Blind Conspiracy, there are a few very troubling developments in the alternative media community that I would like to discuss first. The bulk of these concerns has to do with the increasing amount of faulty analysis and misinformation as well as the peddling of lousy conspiracy theories on the internet.

Why is this a big problem? Because a lot of readers are being misguided as to the true nature of the serious predicament we are facing. Half of the emails that I receive are from readers who are bringing up doubts based on other analysts’ faulty analysis and misinformation. Thus, it takes a great deal of effort to provide the real facts and data to counteract the damage being done by certain individuals, even those with good intentions.

Furthermore, an increasing number of so-called precious metals analysts have switched over to Bitcoin and other cryptocurrencies, believing that gold and silver will no longer function as monetary metals. However, some of these analysts suggest that silver will still be valuable because it will be used as critical raw material in advanced products in our new HIGH-TECH WORLD. I find this idea of a future modern high-tech world quite amusing when we can’t even maintain the failing complex infrastructure we are currently using.

American Society Of Civil Engineers 2017: U.S. Infrastructure Grade Is…???

According to the Amercian Society Of Civil Engineers, ASCE, they just came out with their grade this year for U.S. infrastructure. Does anyone want to guess what overall grade we received here in the good ole U.S. of A? The ASCE gave us a D+:

Well, at least a D+ isn’t an “F” grade. Here is the ASCE’s Infrastructure Report Card Grading Scale for receiving a “D”:

“D” GRADE = POOR, AT RISK
The infrastructure is in poor to fair condition and mostly below standard, with many elements approaching the end of their service life. A large portion of the system exhibits significant deterioration. Condition and capacity are of serious concern with strong risk of failure.

The ASCE U.S. Infrastructure Report also provides separate grades for different aspects of U.S. infrastructure. For example, the U.S. Energy Infrastructure received a “D+” as well. This is a brief description of the Energy Infrastructure:

Much of the U.S. energy system predates the turn of the 21st century. Most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and the more than 640,000 miles of high-voltage transmission lines in the lower 48 states’ power grids are at full capacity.

Moreover, the report states that $4.5 trillion needs to be invested 2016-2025 to raise the U.S. infrastructure to a “B’ Grade. However, only $2.5 trillion has been budgeted. Thus, we are $2 trillion short of the total amount needed. Regardless, I doubt we will be able to spend anywhere close to the budgeted $2.5 trillion over the next decade for our infrastructure. Unfortunately, I see the U.S. Government and private sector running into serious financial trouble by 2020 as the massive amount of debt and derivatives finally take down the system.

So, the question remains. How are we going to move into a new HIGH-TECH world if we can’t even maintain our current infrastructure?

The notion that we can bring on some new “Energy Technology” fails to consider the tremendous amount of raw materials, manufacturing, transportation, and logistics to repair and maintain our current infrastructure. You see, we have much bigger problems than just replacing an energy source or technology. But, to understand that principle, you must look past superficial thinking and “Silver-Bullet energy technologies.”

Now, if you hear certain analysts suggesting that gold and silver will no longer be used as money in the future because cryptocurrencies will take over the monetary role in our new high-tech world, you may want to contact them and provide the link to the U.S. Infrastructure D+ Grade Report.

Destroying Once Again…. Certain Myths About The Gold Market

If I collected an ounce of gold for every email that I have received about patently false gold myths and conspiracies; I could buy one hell of a lot of silver….LOL. Gosh, if I went back to my email folder and added up all the emails on this subject, it would number well over 500 in my ten years publishing articles in the alternative media community. However, I continue to receive the same type of emails because individuals are still being misled.

Before I begin, let me say that I focus my work on disproving the faulty analysis by other individuals, and not directing anything negative towards the person. I am adamantly against the idea of “targeting the messenger.” Rather, I like to target the faulty message. So, there is nothing personal in my attempt to set the record straight.

Let me start off by saying…. THERE AREN’T MILLIONS OF TONS OF HIDDEN GOLD in the world. Anyone who continues to believe this needs to pay close attention to the following information.

In the video, Bix quotes a New York Times article published on June 19, 1912, that proclaimed vast gold riches in the Grand Canyon. According to Bix, this massive gold find is what prompted the starting of the Federal Reserve because billions of ounces of new gold from the Grand Canyon dumped into the market would destroy the monetary system.

While this may sound plausible to the layman, if we carefully read the article and do some additional research, we will come to a much different conclusion than what Mr. Weir is suggesting.

First, Bix makes a grave error during the interview when he states “billions of ounces of gold,” rather than “billions of Dollars of gold.” Here is the segment of the article:

There’s a big difference between a billion ounces of gold and a billion dollars worth of gold. For example, the market price of gold in 1912 was $20.65 an ounce. If we assume that $2 billion worth of gold was extracted from the Grand Canyon, it would equal approximately 100 million oz of gold. If we take it a step further and convert it to metric tons, it would equal 3,110 metric tons…. a figure much much lower than one million tons stated by Mr. Weir.

Second, the article provides us with an idea of the very low quality of the gold found in the silt on the banks of the Grand Canyon:

As we can see, the individual in charge of the mining operation in the Grand Canyon stated that the value of gold was worth 50 cents per yard. When gold miners refer to a “yard,” they mean a cubic yard or a volume that equals 1.3 tons. With an ounce of gold worth $20 in 1912, 50 cents a yard is a tiny amount of gold. Thus, 50 cents worth of gold in a yard is approximately 0.025 oz or one-fortieth of an ounce of gold.

Let’s compare the supposed vast Grand Canyon gold riches worth 50 cents a yard to the gold mining that took place in Alaska during the same period. According to the data provided by the U.S. Bureau of Mines in 1912 Report:

This chart represents “Placer” gold mining in Alaska, which was the same type of gold mining that took place on the banks of the Grand Canyon. Placer gold mining is the process of washing gold from gravel, sand or silt. Lode mining is extracting gold ores from veins in rock. Here we can see that the average value of gold recovered in Alaska in 1912 was $2.10 per cubic yard. Now, why on earth would anyone want to go to the remote location in the Grand Canyon and mine gold for 50 cents a yard when you could receive four times as much in Alaska??? Please, someone forward that information to Mr. Weir.

Third, the notion of extracting Billions of Dollars of gold from the Grand Canyon fails logistics miserably. Let’s overlook Mr. Weir’s error in quoting billions of ounces of gold rather than billion dollars of gold and consider the tremendous logistics of mining that amount gold out of the Grand Canyon. According to the same U.S. Bureau of Mines 1912 Report linked above, Alaska produced a total of 7.4 million oz of gold worth $154 million between 1880 and 1912:

So, in over three decades of mining placer gold in Alaska, the total amount was $154 million. Furthermore, the value of the gold per yard was likely much higher between 1880-1900. Regardless, it took a great deal of human resources, energy, and capital to produce the $154 million worth of gold and the most ever produced in one year during that time-period in Alaska, was 1,066,000 oz of gold in 1906 valued at over $22 million.

Which brings us to the next logical conclusion…. was it ever possible for anyone to produce billions of dollars worth of gold valued at 50 cents a yard in the Grand Canyon when a small percentage of that amount ($154 million) took over three decades to produce in Alaska? Hell, even during the mighty California Gold Rush of 1848, the peak year of 3.9 million ounces in 1852 was only worth $80 million. However, the average annual gold production for the California gold rush was only 1.3 million ounces per year valued at $26 million. It would take a great deal of time mining gold during the famous California Gold Rush to equal just $1 billion.

Even at $1 billion, that is only 50 million oz of gold or a measly 1,555 metric tons of gold. Again, nowhere near the one million tons of gold suggested by Mr. Weir.

Lastly, the supposed vast gold riches in the Grand Canyon came to a dismal end. That’s correct. If we spent a few minutes doing a bit of research on the internet, we would find out The Rest Of The Ugly Story.

(American Placer Gold – Spencer Mining Operation 1911, Grand Canyon)

According to Arizona State history of gold mining at Lee Ferry in the Grand Canyon, the American Placer Gold company needed coal to process the gold. Unfortunately, the only coal seam was 28 miles away. So, the gold mining investors decided to incorporate a steamboat to transport the coal:

Investors decided a 92-foot steamboat would improve coal transport and gold production; it was ordered and assembled by late February 1912. Dubbed the Charles H. Spencer, the steamboat performed the way it was supposed to, but it burned most of the coal it transported in the process. Spencer also had trouble with his amalgamator and by 1912 his investors had seen enough and shut the project down. Spencer left, and his boat sank to the bottom of the Colorado River. The Charles H. Spencer is now on the National Register of Historic Places as a shipwreck in Arizona.

Just consider for a moment the type of intellectual thought process taken by these investors who couldn’t understand that the steamboat would consume most of the coal during its 28-mile trip.

Thus, the LIFE & DEATH of the Great Vast Gold Riches in the Grand Canyon came to an abrupt end, not because there were billions of ounces of gold that would destroy the global monetary system, but rather due to the typical mistake made by investors. And that is… the belief that utterly incompetent management and miners could extract low-quality gold that is uneconomical to produce.

So, if we look at the New York Times article that Mr. Weir quotes as his source of billions of ounces of gold, we can logically assume that it was likely written by the company spokesman to get more POOR UNWORTHY INVESTOR SLOBS to purchase the American Placer Gold stock before it went belly-up. It’s called the PUMP and DUMP…. a shady stock marketing technique that has been going on for hundreds of years.

If we can have an open mind and the ability to discern fact from fiction or lousy conspiracy theories, we can finally put an end to the notion that the world has a Million Tons of Hidden Gold in the world.

THE BLIND CONSPIRACY: The Gold Market Is Heading Towards A Big Fundamental Change

Now that we have dispensed with certain conspiracies that don’t pass the smell test, there is a real one that very few are aware. I call it the BLIND CONSPIRACY. The interesting thing about this conspiracy is that nobody really knows about it. However, it behaves like a conspiracy because many individuals and parties are manipulating the market which is providing a false sense of security to the average investor.

Thus, investors with a false sense of security, continue to invest in STOCKS, BONDS, and REAL ESTATE at amazing inflated values. Today, the Dow Jones hit a new record high of 24,272 points:

If you look at this chart of the Dow Jones Index, it is starting to resemble the Bitcoin chart. However, Bitcoin’s graph is moving up at a level ten times more insane than the Dow Jones Index:

While the Dow Jones Index increased 4,200 points, or 21% since the beginning of 2017, the Bitcoin price has surged more than $9,000, or a staggering 1,125% increase. Furthermore, the Bitcoin price doubled in just the past month. This is completely insane. Even though a lot of Bitcoin enthusiasts are shouting for $20,000 and $100,000 Bitcoin, if we are ever going to get there, there needs to be a serious correction first. However, we may have already seen the top of Bitcoin at $11,400.

Folks, nothing goes straight up and then continues even higher. I would be very cautious about investing in Bitcoin at this time. Both the stock market and cryptocurrencies are extremely overbought… to say the least. On the other hand, gold and silver have been selling off over the past several days and are even closer to their lows and cost of production.

Getting back to the Blind Conspiracy and the Big Fundamental Change in the gold market, investors are entirely in the dark about the dire energy predicament we are facing. I continue to receive emails from individuals in various industries that tell me the “Situation is MUCH WORSE than you realize.” Also, there are good CLUES published in the media if you are IN-TUNE to this information.

“A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands.

If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen.Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

ConocoPhillips’ CEO said that it would no longer invest in any oil project that needs a breakeven price of $50 or higher, according to the FT.

If the Major Oil Industry believes that upwards of 70% of the oil reserves should be left in the ground, how much do we really have left to produce?? Furthermore, it was quite surprising to see that the ConocoPhillips CEO said they would no longer invest in oil projects with a breakeven above $50. Folks, there aren’t many oil discoveries available with a price tag less than $50 a barrel.

Again, the clues are all around. Let me repost the completely awful financial results by the second largest natural gas producer in the United States. Chesapeake Energy produced the second highest amount of natural gas during the first nine months of 2017 at 2.9 billion cubic feet per day compared to ExxonMobil’s 3.1 billion cubic feet per day. So, what benefit did Chesapeake receive for producing the country’s second largest amount of natural gas? Take a look at the Q3 2017 Cash Flow Statement:

After everything was considered, Chesapeake’s operations provided $273 million in cash (shown in the highlighted yellow). For those who are not familiar with Cash Flow Statements, we subtract capital expenditures from cash from operations to arrive at their FREE CASH FLOW. Unfortunately for Chesapeake, they spent a staggering $1.6 billion (highlighted in blue) on drilling and completion costs (capital) to produce their natural gas and oil. Thus, Chesapeake’s Free Cash Flow was a negative $1.3 billion.

That would have been terrible news if it wasn’t for the sale of properties of worth $1,193 million ($1.2 billion.. two lines below the highlighted blue line). Which means, the financial wizards at Chesapeake used asset sales to help pay for their natural gas drilling capital expenditures. How long can Chesapeake sell properties to fund their drilling costs??

Are we starting to get a PICTURE here? Regrettably, even highly trained energy analysts do not understand that the oil and gas industry is cannibalizing itself just to stay alive. If investors do not understand just how bad our energy situation has become, they are BLINDLY investing in the worst assets (STOCKS, BONDS & REAL ESTATE) that derive their value from the burning of ENERGY.

This is the BLIND CONSPIRACY. It’s taking place right in front of our eyes, and virtually no one sees it.

We are going to experience a Massive Fundamental Change in the gold market because investors will finally begin to understand what a true store of wealth is versus one that is an ENERGY IOU. Stocks, Bonds, and Real Estate get their value from burning energy IN THE FUTURE, while a gold or silver coin bought today, received its value from burning energy IN THE PAST. That is a big difference that investors, even precious metals investors fail to realize.

IMPORTANT NOTE:

I plan on putting out new information on this and other interesting subjects in new video format on the SRSrocco Report Youtube channel. I regret not using the video platform in the past as it is a tremendous tool in getting the information across in a more easily understandable way. So, please look out for my first video to be published in the next 2-3 weeks.

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Fantastic article Steve. Please, more like this. I want to see the record made straight about Gold and Silver myths.
Could you provide a source for the claim that the big banks have created 600 times more silver on paper than physically exists (or just clarify all this for your readers). I’ve heard Mike Maloney use that same figure, and gold at around 290.

I do agree with you that Bitcoin is probably not long lasting, but people do misunderstand it’s potential. I also agree to proceed with caution. BUT, as the dominos fall one by one where do you think the average person facing crushing inflation and capital controls will go? Crypto currencies are easy to buy and sell, and can be done in any amounts of money. I see this going on for the next couple years as the Venezuela’s of the world take their turn falling down.

I moved a small amount of fiat into my coin base account from my bank account. It will take 5 days for the transaction to close. I purchased some gold with bitcoin I had in my coinbase account. The transaction took 30 minutes to complete and was complex. I don’t get it. I could have done the same thing with a CC and the transaction would have been completed in under a minute. The crypto block chain technology has a wonderful future and holds a lots
of potential. The crypto currencies might have one too. Just not sure how or with which currency.

There is a maybe another reason why the stock prices are rising. That reason has to do with the gigantic trade deficit of the USA (approximately $ 500 billion per year). What is if foreign countries like China, Japan, Germany, South Korea and others don’t want to buy US Treasuries anymore because the interest rates are to low – what is if they want to buy stocks not only because of the dividends but because of the possible knowledge (transfer) they could possibly achieve ?

Speaking of infrastructure, my daughter was asking me if I thought flying cars would ever get developed. I quickly said “No. Not in our life times.” “Why not?” she asked. “It requires too much energy,” I said – Basically you are talking airplanes (need long run ways-limited access) or helicopters ( theoretically more access, but too much complexity, training, and gas.)

I explained that enormous energy has already been expended to build the nice smooth highways which allow cars to get 20 miles a gallon as they glide along. If the roads suffer from lack of upkeep and develop ruts and potholes, then we will get only 15 miles a gallon. I witness the truckers that are held up for miles here in western North Carolina. Even less efficiency.

If our financial house were in better order, i.e., less sovereign, corporate, and consumer debt, and we had a stable monetary system like gold or silver, then the transition would in theory be smoother.

But with both financial and an energy system train wrecks converging, the transition is likely to be much more abrupt.

I couldn’t agree with you more. I get a real kick out of GEEKS who think we are just going to PLUG & PLAY a new high-tech gadget like “driverless cars” and that will solve our problems when the very roads and highways are disintegrating.

Furthermore, what I failed to mention in the article was the positive ruling by the U.S. Government to make the Grand Canyon a public national park. I am extremely glad that we didn’t allow massive gold dredgers to extract subpar gold up and down the banks of the Colorado in the Grand Canyon. It was a good choice to leave some beautiful part of nature alone, without stupid humans destroying it for 50 cents a yard.

‘Stocks, Bonds, and Real Estate get their value from burning energy IN THE FUTURE, while a gold or silver coin bought today, received its value from burning energy IN THE PAST.’
Nicely said. You have introduced these (original?) ideas years ago. Perhaps existing improvements on property might have some past energy therein; buildings and subsidised solar lol. Yet depreciating over time. So the RE you refer to might be leveraged land values component of RE. However in a recession buildings might become cheaper to build.

You bring up an excellent point worth exploring. As to the subject of Real Estate and their “past energy” as a store of value, let me say the following:

Most Real Estate is financed via a mortgage. Thus most people do not own their home… the bank does. When we finally experience a collapse in U.S. and global oil production, all economic activity will decline significantly. We must remember, the value of a home is based on a monthly mortgage payment. If all homes were paid in FULL, then it would be a different scenario, but they are not.

So, there is a difference between SUNK ENERGY CAPITAL and LIQUID ENERGY CAPITAL. A typical suburban home in a system that needs a lot of oil to be flowing so people can get to work and to stores fails miserably when oil production heads south. Which means, I see 100’s of thousands of suburban homes vacant in the future because they are no longer useful. Thus, we will see a tremendous collapse of Real Estate values across the United States with very little in the way of buyers.

Most of the Real Estate in the United States will be SUNK ENERGY CAPITAL, while most gold and silver will be LIQUID ENERGY CAPITAL. People will not be able to sell their homes because there will be millions of others trying to do the same thing with a fraction of a fraction of buyers. However, Gold and Silver are still extremely functional in a declining energy environment because we still need to trade and hold wealth.

However, the majority of the wealth in STOCKS, BONDS, and REAL ESTATE will vaporize leaving most Americans completely dumbfounded.

Maybe a little off topic but along the same lines more or less. Your point that when this whole energy-deprived, debt burdened global economy comes crashing down there will be millions of homes worth practically nothing is I think spot on. Who are the banks going to foreclose on, when the homes are worth next to nothing or less. Will there even be any banks left to do the foreclosures. I mention this, because a fundamental part of my post-collapse plan is my belief that once the SHTF, then by default the place where you live becomes yours if you want it, free and clear. I just don’t see a lot of debt collectors or law enforcement officials going around delivering foreclosure or eviction notices once SHTF. Am I wrong to think that way?

You could be right. Yes, when oil production collapses, as well as the economy, it will take the banks down with it. So, it could be true that people will just stay in a home they no longer have to pay for. I imagine for a while, this may seem like a good thing…that is until services start to shut down.

However, conditions in different suburbs and neighborhoods could become downright UGLY as the services, like Garbage collection, water, sewer and even Police patrols are cut back considerably. Gosh, that could be a fricken nightmare.

I have no idea how this plays out, but I can see that significant portions of U.S. suburbs may no longer be nice places to live… even if they were free.

Thanks for your response Steve. And thank God I don’t live in a suburb. Based on my “theory”, I went full retard and financed an 11-acre “doomstead” in the mountains. Running about 20 chickens now free range, got a 10K gallon rain capture water tank with gravity feed down to the “garden” which is about 2 acres of 100 foot rows where I am growing (and preserving) LOTS of food, not to mention my 12-or-so beehives that provide 30+ gallons of honey per year, so far, and just planted a one-acre 100-tree hazelnut orchard. I’m reaaaddddy!

I think Steve, you hit the nail on the head. It is possible that you won’t even be able to give your home away if it lacks support services, unless I suppose you can grow your own food on your lot, but with lawlessness, you can be assured you won’t benefit, the looters will. So I would respectfully enquire NW Resident, ready for what? The vast majority of people have been off the farms for so long, that they are absolutely helpless without the elaborate just-in-time support system we have, and which is now increasingly vulnerable to a sharp drop off due to complexity and dependence on increasingly stretched financial and energy lifelines.

I have pondered whether we will eventually see a great unwind of the 20th and early 21st century with a boomerang back to more rural subsistence farming and self-sufficiency -at least for a while -until the system reaches an equilibrium of rural vs urban inhabitants like it did before the Great Depresssion. This is not the proper forum to discuss this issue, but in other prepper sites, you see only outrageous opinions like “if you have 6,000 rounds of ammo for every gun you have in your arsenal then you are ready ” nonsense, along with other financial channels like Bix, and my favorite “loony” Bo Polny, who make it difficult to discuss any of these issues with reasonable, analytical, open-minded people. They all burst into a dogmatic hysteria. I have even started reviewing what life was like back in the Communist regime in the Soviet Union, not because Communism works, but in a severe economic decline, the conditions we may be forced to live in might be similar to those experienced during the Soviet Union. All those homes in the suburbs or cities are more easily owned and controlled by a centralized government. While I’ll am reluctant to mention the “2nd amendment ” into the discussion, I wonder if this would be enough of a deciding factor for those of us in the US to avoid a similar fate those under Soviet control experienced. Life in more rural areas would be exceedingly difficult.

However, you could argue that people of the Soviet Union were “rescued” by the fortuitous white knight “capitalist democracies” during times of economic boom and cheap energy. Capitalist countries could sustain wasteful military spending (Ronald Reagan build up) whereas the exhausted communist Soviet Union system could not, because Communism was not a political or economic system which could exploit the cheap energy and wide availability of raw materials at that time, unlike the capitalist economies. This energy rescue is now gone.

“Who are the banks going to foreclose on, when the homes are worth next to nothing or less.”

I too have pondered this question, but have come up with a not so nice answer.

Someone I know had recently “paid off” their home loan. Rather than paying the bank and getting the title back, the cash (only $5k) was given to another person and then that person holds that debt and needs to make the last few payments on the loan. (Please ignore all issues of trust, etc, it was between family members and all is okay.) Now getting back to your question – what I believe will happen is that the banks will ignore all the fully indebted home owners who have little to no equity in their homes (nothing to take from them)… they will go for the homes/businesses/people that they can extract/steal the most from, like the person mentioned above.

When the time comes they will not care how much loan is left, and even their ability to pay it off, all they care about is asset theft to “save the banks”. I believe this will happen. I advised that this low interest loan setup is sheer insanity, but the “borrower” in this case did not listen. I have yet to advise the homeowner.

So a related question is: why do banks continue to hold titles even when the loan is fully paid, unless you push them to release the title from mortgage? Because they use them to cook their books, and to hold as an asset that they can sell at any time regardless of low/zero loan outstanding. IMO it is imperative to get your assets off the banks’ books and their clutches ASAP.

There will be a point in time in the not too distant future when banks as we know them will simply cease to exist. Due to lack of oil/energy, as Steve often points out, this world that we know and all the rules and laws and regulations we live under are all going to undergo significant changes. The scenario I am talking about is mass unemployment 90% or greater, near total breakdown in shipping/trucking, frequent power outages if there is any power at all in most areas. Total absence of rule of law for extended periods in most places. Under these conditions, that bank that owns the mortgage on your home will be an empty building, almost certainly vandalized and burglarized. This vision of the future may never come to pass, or maybe it will many years into the future, but my logical (I think) analysis of the situation is that it could become reality at any time, and very quickly — a rapid phase change if you will. Anyway, if a bank can’t sell a home because it has zero buyers, then from the bank’s POV that home is worthless. And if they suddenly have a few million homes like due to a SHTF scenario, then at that point we can say that banks will have ceased to exist, and that you will at that point OWN the home/apartment you are in simply because you possess it. It will be yours to hold or to lose.

Steve, there are, in my estimation, 3 outstanding alternative media oil analysts that truly understand the dire nature of our modern civilization predicament (TINA-there is NO alternative).As a financial analyst by profession, when it comes to analysis, I recognize talent when I see it. I have followed your work from its inception on the web and our situation is playing out just as you predicted, timelines aside. The other two notables are Steve Ludlum (Economic Undertow) and Gail Tverberg (Our Finite World). I consider the three of you geniuses as you correlate the energy/economy nexus. Ludlum predicted the oil price crash of 2014 to the month and in his most recent post “Keeping Up Appearances” presents another compelling graphic that confirms your timeline on when we can expect the final act of the impending oil debacle. If you haven’t already read it, I simply suggest you do so.
I get no pleasure following this horror story but what’s the alternative? I guess the alternative is to become moronic, delusional or part of the masses of uninformed or ignorant. After decades of financial analysis and management consulting it was my job to be honest and forthcoming with my clients but always in a respectful and considerate manner. The reason I have isolated the three of you is because that’s precisely what I feel underpins your collective work. Not only first rate, but delivered in a manner that represents the highest qualities and integrity of inter personal relations. In one word “RESPECT/FULLY.”
Keep up the great work Steve!

Yes, excellent article by Steve Ludlum. I totally agree with you that very few analysts get the HORRIBLY DIRE ENERGY PREDICAMENT we are facing. I thought I would post Steve’s chart from the article as it reveals the big problem ahead:

However, I believe Steve’s trend line down to $50 by 2022 may be a bit optimistic. I could be wrong, but we may see much lower oil prices by then.

Steve, will not this basic economic law come to play?
I foresee an energy starved future, where only the very rich and/or powerful have access to the last supplies of expensive energies. The vast majority being literally left out in the cold, while the 1% continue living a completely separate existence. A starkly bold, two tiered society.

Great article Steve. I really like the historical background you shared on the gold deposits in the Grand Canyon. I’m sure if it was an economical resource a hundred years ago it would have been mined, fortunately it wasn’t and we now have a natural wonder to visit and cherish. As for Bix, lost his credibility ages ago.

In your scenario all big earth moving mines would become uneconomical due to energy restraints. Would you recommend vein miners that can still be done by hand or limited energy requirements. Would they be a better investment?

All energy depletion scenarios assume that the world will continue to employ 1900’s technology (internal combustion engine) for transportation. IMO within the next decade that technology will be replaced and the fossil fuel energy life as we know it will undergo disruption similar to how the microchip disrupted information technology.

Advanced technology has a HORRIBLE SECRET that most cannot see. For example, the microchip may seem more efficient and disruptive, but when we consider the ENTIRE SUPPLY CHAIN that produces and uses microchips, they are MASSIVE ENERGY HOGS.

This is the problem with advanced technology. The END USER cannot CONNECT THE DOTS and see just how much energy is being consumed in the process. Advanced technology DEVOURS A MASSIVE AMOUNT OF ENERGY… much more than its older, more simple 1900’s technology.

Second, the fact that mr Weirs article was published in the New York Times does make mr Weir a usual suspect to me; a paid troll that needs to keep people aboard the monetary plane of ‘infinite growth’, and yes, mr Weir, i already see your cheeks light up when you read this.

Third, compliments for all your hard work Steve, and your constant publishing of cold hard facts.

Currently, imho, i see a lot of efforts to keep people out of the physical plane by pumping crypto’s.

Let it be. Almost all charts coming out of the monetary plane suffer Exponential gonorrhea. And still they bend over.

Just for sake of clarity, that New York Times article was published in 1912. Bix was just quoting the FANTASTIC ASPECT of the supposed billions of ounces of gold in the article to back his ROAD TO ROOTA Theory.

Unfortunately, a lot of people believe Bix, because FANTASTIC CONSPIRACIES are more exciting to believe than the boring truth.

No doubt about the conspiracy theories/theorists. I must add most of the catastrophism out there is used to sell something (coins, etc).
I do have issue with some of the analysis – aka cherry picking misleading data. I live in Alberta (oil sands country). Whatever Statoil, etc sold, Chevron, Suncor, etc bought- so it’s not like the oil is being left in the ground. The simple fact is Alberta is the highest land cost producer on the planet, and we have to take a $12-17/barrel discount to pipe it to the US – our only customer. Yet the production/development continues to rise, regardless of the low prices. http://economicdashboard.alberta.ca/OilProduction
If the EROI theory was correct (hint, it’s not), why isn’t production at least levelling off ?
WHEN oil will be 4,5,6,7 times Dr Arnaux’s forecast – $11.76 by 2020 – will all you people admit it’s lunacy, or just blame it on manipulation and add another 5 years to the timeline, then another 5, and so on ? Just asking…

You bring up some interesting points. And yes, it’s true that tens of trillions of Dollars of Central Bank money printing and FOREX currency swaps has allowed the system to go on a bit longer. Furthermore, I did state in previous articles that Louis Arnoux and Bedford Hill could be wrong on their timing. However, I believe it is only a matter of years, not decades.

Lastly, what is 5-10 years in the whole scheme of things when we humans live 70-80 years on average… and have several generations of children below us???

Please check out the Bedford Hill ETP Chart I posted in response to Emil. Even though the price of oil is now trading at $58, the average for 2017 is $49.61. I believe the market is setting up for another 1987 style market crash. The number of traders shorting the VIX and other shorting vehicles are well above $1.5 trillion in leverage. I just interviewed with Jason Burack, and he told me that $1.5 trillion figure from a hedge fund guy he interviewed.

When the market really crashes between now and say 2019, probably in 2018, it will take the oil price down with it. We will likely see $30 oil once again.

That being said, I have no idea what the Fed and Central Banks will do to prop the markets up a bit longer. But, I don’t see the U.S. shale oil industry surviving much past 2020-2022. The energy markets are likely to become a real mess by 2025.

It is the utility (MASOP – red line) of the oil that is dramatically decreasing because of the declining ERO(E)I but the price (blue line) is the actual price per barrel and leaves the chart in excess of $140/bbl (SOP).

Some messengers do deserve to be shot and Weired is one of them. On every one of the many times he has been shown to be wrong he simply digs in his heels and doubles down on the lie. Bet he doesn’t answer this put down.
Thanks Steve! For that and all.

I agree Bix is a total crackpot. Steve did a great job of debunking his vast horde of gold hidden in the Grand Canyon. I was hoping someone would challenge this clown’s assertion based on a 1912 article which he either accidentally or on purpose misread. I am so sick of these ridiculous stories by nutcases like Bix and Karen Hudes about vast hordes of gold like Yamishita’s gold and Grand canyon gold.

Thank you for your response. Isn’t it somewhat self serving that you are willing to give leeway to the only part of the EROI theory that is measurable now – aka timeline? The LA “petroleum price chart” from your Aug 2016 article (yes, I’ve been visiting the site a long time. Despite my grumpy demeanour, I find most of your articles extremely informative:-), is way off from what happened since.
Before finance, my first degree was in History. The elites never lose big in things that matter. Ever. If there was a cataclysmic event, there would be “blood in the streets”, and the top 0.01% would have a drastic (albeit a lot better than the rest of us) change in their carefree lifestyle. They will not let it happen, and none of us have a clue of what tools they have in their quivers to stop it. The Fed covertly gives away billions, trillions. What stops them from giving away 10 times that, or more ?https://www.sott.net/article/250592-Audit-of-the-Federal-Reserve-Reveals-16-Trillion-in-Secret-Bailouts

You must be referring to Bedford Hill and the Hills Group ETP PETROLEUM PRICE CURVE Chart. Yes, there is the Maximum Affordability Line that is heading lower from 2012 down towards 2020. Here is the original chart:

However, the oil price is actually trending down with that Maximum Affordability Line.

The average WTIC Crude price for 2017 is $49.61. According to the chart, the Maximum Affordability Line intersects at $55 a barrel for 2017. Now, Bedford stated that the line is an estimation that could experience price volatility above and below that line. Regardless, it will be interesting to see what happens with the oil price over the next five years.

… it will be interesting to see what happens with the oil price over the next five years.

I think it will be interesting to see what will happen over the next two years. $11 a barrel oil in 2020 looks to me like a nightmare scenario. At that price tag with no real energy alternatives we can say good bye to everything. The Road is coming.

Thanks for sharing your thoughts! Indeed, the world desperately needs a new more sustainable energy extraction method. We as humans have biological extraction vehicle, which goes down to sub-atomic nuclear physics. This gives hope. And yes, we are so short of time that makes so horrible to see the mindlessness of countries leaders wasting time and our energy in the wars, instead of focusing on fossil replacement. So again, thank you for Kasandra’s prophecy job You carry on. Those who can hear, will hear You.
Just one question: why you are so sure that in case of global energy collapse, people will go for silver and gold monetary exchange? Having population of 8 billions, have you counted any estimate on how many “coins” will be physically needed to erect that kind of merchandise-numberface swap trade at retail level? And nobody will have time to wait his or her package of “coins” arrival – as the hunger is closer to the stomach. I remember Germany collapse – it was cigarettes as a currency. I remember Soviet Union collapse – bottles of vodka were the currency. I was reading report on Zimbabwe? recent collapse – initially it was even tampax used as “coins”, but eventually it were replaced by paper tickets to have the right to fill-in fuel.
In my opinion, people today are too much used to the daily conveniences. Who ever uses outdoor toilet in a house? Have anybody even remembering how it was to go outside at minus 30 celcium?
What I think, in case humanity should fail to win this race, the viable solution will be to make a huge granaries as Amazon already have around the globe and these granaries shall issue and circulate the paper tickets at retail level and the sophisticated swap-exchange trade system at fiscal manufacturing level.
Kind regards and take care!

Steve, Thank you so very very much. I have stated the same thing as you but not as detailed. You do amazing work. Bix also says there are “millions of tons!!!” of gold just in California but you know its hidden by a special army.

I’m surprised Bix doesn’t realize how much time it would take to mine and especially to refine . I’m also very disappointed in Bill Holter and Jim Sinclair for not challenging him
enough on their interview with him and Clif High. You are also spot on regarding the non tangible (skies the limit) crypto currencies.

Thanks for bringing up that additional information. However, the Housing Market Price is set at the margin. And the Margin is not the Cash Seller, it’s the mortgage buyer. Most homes today are purchased via mortgages, even though many homeowners do not hold a mortgage.

Regardless, the ability to extend a home payment for 30 years allows homeowners to afford more home than they could afford by paying cash or a shorter 10-year loan. Moreover, falling interest rates also allows homeowners to afford a more expensive home.

However, I agree with you that Housing Market Crash is most certainly coming.

Understood. I obviously misread the graph. Don’t get me wrong, nothing would please me more than PM’s heading up , and oil down. Just a skeptic, and I believe what I see at work, and where I live.
Thank you for your content & diligence. I’ll be around occasionally to stir the pot.

You are right about Bix, you are right about EROI and the energy markets, you are wrong about bitcoin. Calling a bitcoin top at $11,400? Bad move. Luckily you hedged and said we “may have” hit a top. It isn’t. I foresee at least $25k BTC by the end of 2018. What you and many analysts get wrong about bitcoin is the fact that you can’t compare it to stocks (which are supposed to be valued based on earnings), bonds or real estate. All these things have benchmarks, valuation tools, etc. Bitcoin is a competitor to fiat currency. Ask yourself: do you trust banks? If the answer is no, then welcome to bitcoin. If the answer is yes, may I suggest an account at Wells Fargo – surely they are competent and trustworthy. Bitcoin is a currently a very small percentage of the overall fiat currency world and gaining ground (adoption) at a quicker and quicker pace. Yes, there is also speculation going on. I suggest diversifying into other cryptos too like LTC, XMR, QRL, ETH etc. Remember that crypto is global too. Maybe 1% of the world population has purchased any bitcoin ever, and any person with a smartphone could be an end user of crypto currencies. Opportunity is calling, but people get so scared about the USD value of 1 BTC. You can buy a tenth, or a hundredth, or a thousandth (or smaller) of a bitcoin.

SD
Bitcoin and most if not all of the upstart cryptos will be replaced by an official digital block chain currency. You’ve been reading too much Dollar Vig and Andy Hoffman. I hope you haven’t forked out for a Roota sub.

Notice how ron does not refute any actual arguments, but merely denigrates Hoffman and Berwick. I’ve been stacking PMs since 2009 and buying bitcoin and cryptos since 2013. I’m able to think on my own without talking points from those two guys. Saying bitcoin will be “replaced” by some “official” government backed crypto is complete stupidity – and lacks even the most basic understanding of how and why bitcoin came into being and why people want it. Any government can create a crypto if they want, but they can’t force me to use it any more than they can force me to use USD other than to pay taxes. I will await your next insult with zero substance or arguments.

Steve, thank you for this clear and logical analysis of Bix’s Grand Canyon theory. But can I ask you, what about Yamashita’s gold? Having initially thought this was something of a folk tale, I read the Seagraves’ book Gold Warriors – with documents piled miles deep – and came away pretty convinced. Any insights on this?

Great article Steve thanks for the TKO on Bix. I was waiting for you to go after his Gull Island fantasy but you probably can save that for another day. Seriously a one time listen to him is all it will take to realize he is a FAKE or certifiable Nut Job. How he has lasted this long as any kind of “Pundit” is well beyond me. Maybe the need to fill slots for some websites. As pointed out he is a fake news source and belongs in the same camp as Hairy Dense.

I’ve been researching the Pilgrim Society. Some think Cryptos are controlled if not created by them. Maybe originally to keep the plebs out of au & ag at the next crash. I am interested in what happened in 1873 when land contracts suddenly became no longer payable in silver but only in gold. Wizard of Oz theme. Wondering if suddenly all mortgages will be payable only in bitcoin. I got out of debt because I originally thought maybe everything was going to be rewritten and payable only in gold as the dollar fizzled.
If anyone of you brilliant people can get me a link to good info. about 1873 thanks in advance.

My impression is that we have a lot longer than stated here and this timeframe will allow alternative energies to become established. The more likely scenario for a crisis will emanate from credit and will impact the US oil shale and Canadian oil sands first. However, imho, other more efficient fields have a lot longer to run and so therefore, does our way of life.

Ahhhh…. the Ugo Bardi article that supposedly debunked Louis Arnoux and the Hills Group. I could tell you stories about that article. However, I know Ugo Bardi who first published that article on his site. I am apart of an Energy-Transition & PeakOil Group Google Email group started by Ugo Bardi. I have corresponded with Ugo Bardi for years.

There was a debate between Louis Arnoux and his group against those led by Ugo Bardi. I read every email response during that debate.

What was left out of that article was that Louis Arnoux and The Hills Group have a large number of engineers and scientists that back their findings. I can also tell you, those who were against Louis & Bedford were very short-tempered and disrespectful. Now, I am not including Ugo Bardi in those who debated because Ugo did not have the thermodynamic background to provide an opinion.

Regardless…. Louis Arnoux and Bedford Hill stated that their model was based on THE AVERAGE BARREL OF OIL, and they could be off on the timing. However, I believe it will be a matter of years, not decades.

Thanks for your comments – as always there are conflicting views and opinions.

I confess I only know what I’ve read, whilst also applying some common sense and thought. Here in the UK they plan to continue producing petrol cars until 2040 (there’s a clue there) and I would expect fracking technology, if applied worldwide, will buy us extra years or possibly decades.

My laymans estimate is that we probably have 20 years which shoukd be enough time for solar energy to come on-stream. Time will tell.

Great article Steve. I was wondering when someone would debunk Bix Weir’s ridiculous assertions about a vast horde of gold in the Grand Canyon based on a 1912 article which he “accidently” or on purpose misread. I am so sick of hearing about his wacko opinions about gold being so common that it could fill lakes. Between Bix and Karen Hudes who believes in another vast horde of gold hidden somewhere in the Philippines(Yamishita’s gold) gold should be about as common as lead. Great detective work Steve you blew Bix out of the water.

When “solar energy comes on stream” it will save us is pure hopium, as is fracking. But has all been exhaustively analyzed already. See it if you want

Arnoux and Hill were helpful to me. I could be criticized for not really being aware of these counter arguments from Ugo Bardi group I guess. Limited personal energy.

Point here i guess is that think at a certain point this common sense and thought and laymens estimates you refer to and have faith in are just foils. the analytical mind wants to stay constantly busy and grasping as a way to not feel the situation.

Once one understands the basics of the energy situation what is required is to sit at whatever your equivalent of Walmart is for a long quiet meditation and grok how fat, unhealthy, drugged, ill, stupid and dulled out 80% of crowd is. Then, before you vomit, cast your eye to the underlying political, military, social situation, disregarding your own personal slant on it all.

It’s not a dying culture/world. It’s dead. No Hope.

Partial collapse certain within 5 years, to a level of agony far deeper then anything in 20th century. 10-20 years out total collapse to tribal level at least in Western world.

To make babies is a heinous sin. Totally repugnant callousness.
Pray that reincarnation is not true, at least for yourself.

Not to mention how rediculus this idea that a secret miltary base was hiding in canyon all these decades, hiding the gold and all those Egyptian/alien relics and structures.

Guess all the millions of back country trekkers for last 2 centuries never noticed 5k marines with attendant gunships and/or just dutifully went where told to go, respected all fences and just kept their mouth shut.

Do him or at least rest of planet a favor to drop him out of plane into canyon with just a pack and no tech and keep him there 6 months. Reality check

Steve, thanks for all your hard work.
How much influence on your gold and silver opinion has to do with your living in the slightly less insane state of Utah? Wherein the metals are legal currency.
Luvin’ my bit coin today.

The SRSROCCO analysis future energy vs. embodied past energy (gold and silver) is spot-on. Recently some cryptocurrency proponent said that the value of BTC was in the $2,000 worth of electricity used to “mine” each coin. !?!? How can something that is spent, consumed, gone forever, be a stored-value backing for a currency? Cryptos will only fulfill their potential as a trade medium when a system is in place to seamlessly go back and forth between physical metal and digital, face-to-face, at the local level, no shipping, no delay, and no transport insurance.

Oh yes. Real Estate will become worthless. You freakin’ people are delusional. This SHTF B.S. has you messed up in the head. I put $6,000 into GBTC in march 2016 and that has become $180K. What have your rice and beans and gold and silver and oil futures done over this time > Nothing. I put some of the profits into monster boxes at gold silver.com 6 monster boxesI bought for under $60k. 3,000 oz. of silver all from an initial investment of $6,000 and I have $120K still left in cash. Your houses are going to n othing and you can still live in them if you want you say. You people actually have convinced yourselves that your B.S. is true

I started my count on BITCOIN at $2.00 back in 2011. If you look at the numbers exponentially; when bitcoin reached $1024.00 it was up from $2.00, 51,200%. So from this point, to make 100% on your money, it had to go to $2048.00, up 102,300% then $4096.00, up 204,700%, then $8192.00, up 409,500% and now we are headed towards 2x $8192.00 = $16,384.00, up EXPONENTIALLY from the $2.00 starting point 819,100% …. Go Bitcoin Lol

Where to from here $32,768.00, up 1,638,300% !!!! The world has gone nuts!!!

Whilst I am at it I would like to make reference to Steve’s view on Infrastructure, which I support. You have to be BLIND not to notice how much of the west has become dated. Someone, anyone tell me, “Where is the growth in the west”? It is all make believe!

So being the eternal optimist, we wake up in the morning realising the world is full of “ABIOTIC” oil, every one becomes “Shovel ready” to commence the 10 to 20 Trillion rebuild; guess what?

We need “Construction Sand”, Building Sand”; where do we get that from?

I live out in the sticks. The easement to get to my property suffered washout damage from heavy snow runoff last winter. Was put in in early 1970s. Took me all summer to get the money coughed up from neighbors, then find someone competent to do the work. Old guy with 50 years of logging road building came through. Beautiful job. Next time, he will be retired or dead. Materials, money hard to find but competent labor is going to be impossible.

Speaking of “the West”, my dad designed the water/sewer systems for the state parks and rest areas on I-5 in the 1960s. Still functioning, but getting run down.
I try to live where there are no bridges of size between me and town. Sad.

If the Hills Group is anywhere close to correct why would someone want to be left in the end holding precious metals? As the situation enters the dieoff who will give you anything valuable for it? I wouldn’t give you a shotgun shell, diesel, boots machete potatoe or a hat for its weight in gold. So why should I imagine that anyone would trade me the other way around?

Not saying that between now and then might be a great time to use precious metals but in that case we neet to be discussing the time to let go. Is there any reason for hoarding if no plan is in place to spend?

Same goes with cryptos there’s got to be a time to buy and there will definitly be a time to sell. Hopefully I don’t miss the sell window.

Your arcticle on the energy cost to mine bitcoin got me to wonder what is the energy cost for the worlds current banking system. It could just be that bitcoin uses less energy per $ transacted then our current banking system.

What if someone has something You want, say a goat, and they don’t want “a shotgun shell, diesel, boots machete potatoe or a hat”. Maybe it would be good to have real money – gold or silver. So he can sell you his goat and go buy something he wants that you don’t have. Think about it, at some point after the chaos people are going to want to do “business” which is difficult if you don’t have money – real money. So if you are smart, stack some silver along side those ammo cans. It will make your life a whole lot easier in the future.

Amen to that SteveW.
How unromantic physical gold and silver appear to be right now. Clearly, the S&P 500 along with a host of other high fluent paper and digital investments are overdue for a major correction. Compound that with the fact that the next crash event will be a world jolt downward in a big way. Physical gold and silver have been proven time and time again to help stabilize markets. Most likely the black market will be one of the 1st to be re-established for society to find normalcy. Crypto could be in the crapper for awhile, eventually righting itself.(Provided an alternative will be invented to get around the dilemma, eroi or the lack thereof, which Steve has spelled out in which lies directly ahead of us) It will be interesting to watch who wins the foot race, the fossil fuels petering out or the markets caving. Time will tell.

SteveW Lets be honest. The chances for you or me to get through the bottleneck are, well lets just put it this way. Anyone planning on coming through should also plan on delivering several wheelbarrow full of those pms for that goat. But ofcourse that will be easy compared to finding someone with a goat. He/she would be smarter to go hunting for field mice instead.

I want to challenge each person here to take an informal survey in regards to crypto currencies. For example, I was at the Miller Hill Mall in Duluth, MN on 12/02/2017 and asked 29 random people if they owned any crypto currencies. They all gave me this look like what are you talking about? Only 1 even heard of Bitcoin. So, this is the very, very early days of the transition from our current economic system of central banking and everything that is under it. To this new decentralized crypto economic system. This Crypto Currencies and Blockchain Technologies and the Companies that are built on top of them are going to change the world. If you read this then I hope you get on board now because if you don’t, you will be left out of the position that you need to be in a mere 4 years. Oh, you need silver to.